Each of us has used the services of ASCs at least once. Most of them provide the bulk of administrative services – which is 90% – “free of charge”.

Budget funds are used to administer the provision of these services. These are the funds that are now urgently needed for the country’s defense, education, healthcare, and culture, said Viktor Tymoshchuk, deputy chairman of the board of the Center of Policy and Legal Reform. 

We are talking about billions of hryvnias annually that local and state budgets do not receive. The expert explained for Ekonomichna Pravda why Ukraine needs the draft law “On Administrative Fee”. We are publishing the key points from the article.

Lack of resources

On average in the country, revenues from fees for administrative services in communities and their ASCs account for about 30% of the needs allocated for the maintenance of these front offices. This is not including back-office expenses. And this is only for two groups of services: passports and real estate registration. 

What do these figures mean in the context of martial law and a huge budget deficit? They mean that the system of administrative services, which was developing quite well before the full-scale war, is being negatively affected by the lack of resources. 

There is already a lack of funds for proper remuneration of staff, for competing salaries, and for providing sufficient staff and their maintenance (especially in larger cities). There is a lack of resources for material and technical support. 

The problem of lack of resources has been discussed by ASCs and local governments for many years. Everyone understands that nothing is free. That a fee of 85 kopecks for an administrative service (such as marriage registration), or other penny payments for the services of a “village notary” are also equal to the category of “free of charge”. 

Therefore, it is necessary not only to revise the fees established by the 1993 CMU Decree. It is necessary to establish moderate compensation payments for all administrative services, where it is socially acceptable. 

A draft law that solves the problem

Back in 2020, MPs, together with experts and representatives of the ASCs, developed a draft law “On Administrative Fee” (registration No. 4380). Conceptually, it is similar to the experience of legislative regulation of fees for administrative services in such EU member states as Poland, the Czech Republic, and Germany (Länder laws).

When this draft law was submitted, it was immediately supported by all Ukrainian associations of local self-government bodies (at the community level), the expert community, and ITU projects in the field of administrative services.

From 2020 to 2022, this draft law was not supported by the key policy body, the Ministry of Digital Transformation. This body was promoting the idea of setting fees for administrative services by the Government. However, even politicians have limited room for compromise here, as Article 92 of the Constitution provides that taxes and fees are established by law. 

Due to the impact of the full-scale war and lack of funds, as well as other changes in government structures, the attitude to the draft law 4380 has changed in ministries over the past year. The last major public expert-political discussion held by the relevant VRU Committee in July 2023 showed that the vast majority of ministries also understand that there should be fees for administrative services and that they should be rational, and therefore support Draft Law 4380. 

Representatives of the Ministry of Digital Transformation and the Ministry of Justice also supported this draft law (albeit with suggestions and readiness to finalize it for the 2nd reading). Only the position of the State Migration Service (SMS) was “cautious”.

Finally, in July 2023, the Verkhovna Rada Committee on the Organization of State Power and Local Self-Government unanimously recommended 4380 for adoption as a basis. Almost a year has passed. The draft law has not been submitted to the session hall.

So who can be against it?

Probably those who feel the risks of 4380. I see two such subjects. 

The first of them is unlikely to block 4380, although there may be “losses” in the field of civil registry offices of the Ministry of Justice. Through the bylaw “list of paid services” of the Civil Registry Office, the Ministry of Justice has been filling the special fund with funds for its own survival for many years. In the end, experts believe that 4380 will not worsen the legal position and revenues of the Ministry of Justice, as it simply legalizes a certain part of such revenues. 

A more tangible impact of 4380 may be on the passport sphere, thanks to transparency. And here there is already someone to lose. First, it is those who really control the State Enterprise “Document” in the field of SMS management. It has been illegally collecting money for years. 

Secondly, probably the most important opponent of 4380 is those who control the passport and form business, or rather the form business in general in Ukraine. On the one hand, this is a state monopoly, because passports are printed only by the State Enterprise “Polygraph Plant Ukraine”. 

However, the reality is that it is almost entirely subcontracted. The purchase of all the elements, from thread, ink, paper, plastic, chips, etc., is all someone’s private income. We are talking about billions of hryvnias of stable income. 

What’s next? The ideal option would be to pass Bill 4380 and move towards transparency, rationality and legality in the area of payment for administrative services. Or … to recognize the limited mandate of the state for its SOEs and leave the form and passport sphere to “workers” outside the law. 

Every month, quarter, year of not making this decision means lost budget resources. The resources that are so lacking for the country’s survival.

Read the full column here.